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China Car Demand Slows as Europe’s Revs Up

A file picture from last year showing a new Santana of Volkswagen at the Shanghai Imported Auto Expo in Shanghai, China.

Associated Press

Not so long ago, when China’s car industry sneezed, all Germany’s car industry caught cold. After all, Volkswagen, Europe’s biggest car maker by sales, sells more of its namesake brand cars in China than it does in Europe. China is among the main catalysts for the long-running boom in luxury cars, a sector dominated by German manufacturers.

Yet investors largely brushed off news of a relatively disappointing demand for new cars in the world’s second-biggest economy Friday, with shares in German auto stocks outperforming generally weak European stock markets. China’s car sales rose a robust 7.9% in March compared with the same month last year, but that was down from a 11% rise in February.

Helping Europe’s auto makers is growing confidence that the recovery in demand at home which, while sluggish, at least looks increasingly durable. European auto makers also continue to take market share in China judging by the market-beating growth they have shown in recent months.

“There are signs of a return to modest growth in the markets in Western Europe,” Christian Klingler, Volkswagen’s head of sales, said Friday. Volkswagen said deliveries of new cars rose 5.8% in the first quarter, with a 8.7% increase in Europe and a 15% rise in China.

Volkswagen’s upbeat view on Europe seems to be backed by the mood in Germany itself. Recent data showed that German auto dealer sentiment was at the “highest level on record” in March as new-car discounts fell sharply from February and March last year, analysts at research firm International Strategy & Investment said in a note Friday.